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COMMERCIAL PROPERTY VIEWPOINT October/November 2018

Whilst inevitably Brexit continues to dominate the political agenda, the continuing challenging retail scene and shop closures is bringing the burden of business rates back up the political agenda. With over 50,000 job losses estimated to have occurred through closures by Marks & Spencer, Mothercare, Homebase, Maplin, Poundworld, etc. and in the restaurant sector by Strada, Jamie’s Italian, Chimichanga etc. doing nothing until after Brexit (whenever that might be!) is not an option. The current chancellor, Philip Hammond has floated the idea of introducing a so called “Amazon tax” to level the playing field between online and the high street retailer, with a possible new tax for online marketplaces such as Amazon and e-bay. Whilst he says this will require renegotiation of international tax treaties, the Chancellor suggests possible temporary tax measures to rebalance the playing field until he can get international agreements. In my view, it is difficult to see how a digital sales tax could work unless on an international basis as otherwise online retailers will just move out of the UK to a somewhere with a more favourable tax regime and the UK will just lose trade. As for the chances of getting international agreement for a digital sales tax, snowballs in the Sahara would seem an appropriate simile! The danger of a new tax is that it will be applied in addition to the business rates burden and just raise extra money on top of the £26 billion raised in business rates, when what needs to happen is the rates burden needs reduction. The current rate poundage is virtually at 50 pence in the pound in England, and is the only tax rate index linked for inflation. It was 34 pence in the pound in 1990, which is more sustainable. However with the Government and local authorities strapped for cash, that seems wishful thinking! The Lib Dems have suggested a Land Value Tax, an idea looked at many years ago and rejected, whilst others have suggested reviewing the myriad of rate reliefs, including charity relief, the agricultural rates exemption and small business rate relief. None of these are quick and easy to implement and would be very controversial and need legislation changes. So I revert back to my original plea to the Government to take immediate action and axe the current transitional system, which would immediately benefit many shops in towns like Swindon, where transitional surcharges are killing off the high street retailer and stopping them receive the benefits of the lower 2017 rateable values they are entitled to have their rates burden calculated on, instead of 2010 rateable values, set before the last long Recession.